RULES OF BUYING A BUSINESS – RULE NO. 2: BECOME AN EXPERT

Buying a business at a great price takes work and preparation. If you are not currently an expert in the industry you are considering you should become one. Interview several people in that industry, read books and articles or take classes. Perhaps you should even consider taking a temporary or part-time job in the industry.

Taking the time to understand the industry could help you avoid a major mistake. For example, are there any trends or regulations that mean the business may experience declining sales in the future? Perhaps the current owner realizes these factors and sees the opportunity to cash out.

If you are considering a franchise I recommend you interview as many current franchisees as possible in order find out all you can about the industry and the business. I am amazed by the number of franchisees you fail to do this and some regret it later. Why else would they put all those names in the offering circular? Make sure to take advantage of the available information.

Also, do not be afraid to find someone in the industry who will mentor you. Many business people are more than willing to help out business owners who are just getting started.

Casey Blake Taking the Majors by Storm

As my loyal readers know I am a huge baseball fan. I follow the box scores every morning of Indianola, Iowa native Casey Blake. As of this morning, Casey was leading the American League in hitting. He also now owns a 13 game hitting streak while hitting .366 with 7 home runs. He is putting up All-Star numbers indeed.

Go Tribe!

Joe Cooney of Frannet will hold a seminar for those interested in franchising. The seminar is this Thursday, May 18, 2006 from 6:00 to 8:00 p.m. The seminar is located at the Mid-Iowa – SBDC office at 10861 Douglas, Suite B, Urbandale, IA 50322. The telephone number for reservations is 515-331-8954.

Topics covered will include:

– How to know you can get into business safely;
– How to find a business asset you can afford;
– How to identify the right business for your personal talents, skills and lifestyle needs

For more information email Joe Cooney at jcooney@frannet.com

RULES OF BUYING A BUSINESS: NO. 1: DO NOT BUY ON EMOTION

Many of us dream of owning our own business and making a fortune. Instead of starting from scratch many people opt to buy an existing business. While it may be less risky to buy an existing business you still need to carefully consider what you are buying.

Many individuals are so excited about the dream they forget about reality. Do not fall in love with the deal itself. Make sure to take a step back and take the emotion out of the deal. Talk with an accountant to determine if you are getting a fair price or maybe even a discount. A first step towards success is to make sure you buy the business at an attractive price.

Sounds easy, right? If so, why do the majority of businesses fail?

So be a good shopper. Buy at a discount if possible. Be patient and wait for the right opportunity.

Rush on Business Blawg to Allow Comments

One of the things that makes blogs unlike traditional Web sites is that readers can leave comments and stimulate discussion. Up to this point Rush on Business has refrained from leaving comments. Well, I have decided to give it a try. But there are a few ground rules:

1) All comments must be clean;
2) No defamation;
3) Any questions or request for legal information must be general in nature and the editor specifically disclaims any attorney/client relationship unless there is a fee agreement between the parties. The editor will not answer questions governing specific circumstances on this blog.
4) Brett Trout can only comment once per day.
5) No spam.
6) These rules may be revised without notice.

How to Hire the Right Attorney for Your Business

There are four professionals that your business will likely need for start-up and beyond.

1) Attorney,
2) Accountant,
3) Insurance Agent, and
4) Banker.

Recently I read article which quoted fitness video guru Billy Blanks as saying he learned how it important it was to hire the right lawyer after his law firm committed malpractice and cost him millions. So how do you hire the right lawyer for your business?

First, lawyers have become highly specialized. Hiring an attorney that does primarily non-business work is probably not best for your business. A business attorney will likely have a better understanding of contracts and business organizations. In the beginning you will need a lawyer that can help you understand whether a corporation or limited liability company is right for your business.

Second, does your lawyer understand intellectual property issues? With the Internet, intellectual property is becoming increasingly important. Your business lawyer should at least have a basic understanding of these issues. Intellectual property is also a highly specialized area of the law but a good business lawyer should have a close working relationship with an intellectual property specialist.

Third, your lawyer should be able to understand and negotiate real estate leases and other related contracts. Having a business lawyer review your lease can pay big dividends. Many business owners assume leases are not negotiable but most landlords are willing to negotiate in some manner and often on key points.

Fourth, how experienced is your lawyer? Do not be afraid to ask your lawyer direct questions about their experience level. Has the lawyer previously peformed the work you need completed.

Fifth, is the lawyer and the law firm well-situated to handle many type of business law issues? Because of specialization no lawyer is able to handle every issue that comes up in your business. Your lawyer should be able to get you to the right person when different legal issues come up. You should not have to go looking for a new lawyer with each different issue.

Sixth, has the lawyer worked in your industry? It is helpful if the lawyer has worked with other businesses in your industry. At the very least the lawyer should be willing to learn about your industry. Better advice will come from attorneys that understand your industry.

Seventh, is the lawyer willing to educate you? Part of lawsuit prevention is education. Your lawyer should be able to train you to spot issues and enable you to implement preventative practices to avoid lawsuits and other problems.

Eighth, is your lawyer fair with billing practices? For routine matters is your lawyer able to quote flat fees. If not this may be an indication the lawyer does not have appropriate experience. In litigation situations the lawyer may not be able to quote flat fees but should be able to give you a range of the expected costs. If you are asked to pay money up front please make sure that lawyer first deposits the money into a trust account for disbursement to the lawyer only when the work is done.

Lawyers Beware!

A recent Forbes article pointed out that lawyers are increasingly subject to lawsuits – not from their clients – but from third parties who may have been injured from the lawyer’s legal advice. The article said, "It has become routine for lawyers to sue lawyers."

Traditional malpractice suits are holding steady although the awards appear to be growing. Many of the largest verdicts stem from conflict of interest cases.

The Equal Opportunity Commission even sued a 1,600 lawyer law firm claiming it demoted 31 shareholders because of their age.

The cloak is apparently off lawyers who were once treated as the gatekeepers of the courthouse. One thing is certain – lawyers will not receive any sympathy cards from doctors.

Sullivan & Ward, P.C. Celebrates Open House Tonight

The Sullivan & Ward law firm has an open house tonight for clients and friends to celebrate the move to its new location. The law firm consists of sixteen lawyers and maintains a general civil practice in state and federal courts–trial and appellate level. The firm primarily represents businesses and their owners.

The firm serves as general counsel for many of the rural electric cooperatives and their associations throughout the state. In addition, Sullivan & Ward acts as general counsel for a number of other businesses involved in technology, communications, manufacturing and retailing. In our capacity as general counsel we advise the companies and the boards on issues of corporate governance, general business functions and operations, labor relations and litigation matters. In the context of litigation we represent these entities directly or indirectly with their insurance carriers. In conjunction with their operations we represent them before various administrative and governmental entities on a variety of issues that include, among other things, compliance with statutory and regulatory matters.

Sullivan & Ward, P.C. is located at 6601 Westown Parkway, Suite 200, West Des Moines, IA 50266. The telephone number is 515-244-3500. Click here for more information about Sullivan & Ward, P.C.

Watch Out for Resume Fraud

Recent news stories show resume fraud presents a big problem for your business. Recently, the Minnesota Vikings Director of Player Personnel was fired for inaccuracies on his resume. Iowa State University has had multiple cases where coaches and faculty have lied on their resumes. Could this happen to you?

Chances are it could. The numbers in a study I read are astounding:

44% of job applicants lied about work experience
41% of job applicants lied about eduation
23% fabricated credentials or licenses

Some things you might do to prevent resume fraud include:

1) Conduct background checks;
2) Have a fraud/ethics policy;
3) Communicate policy to employees and prospective employees;
4) Monitor compliance with the policy;
5) Enforce the policy consistently.

TouchPlay Dead

Yesterday a Polk County District Court judge rejected Plaintiffs’ request for an injunction in the TouchPlay lottery cases. A federal court judge previously ruled in a similar manner. The Plaintiffs had requested an injunction to lift the legislative ban of the machines which goes into effect today at 8:00 a.m. The court ruled the Plaintiffs were not likely to show that the legislature exceeded its authority. Further, the Court found there was nothing in any documents or agreements that bound the State of Iowa to maintain its business relationship with the TouchPlay vendors.

The legal battle may continue if the Plaintiffs’ appeal but TouchPlay is apparently dead.